Draw a macro equilibrium using AD/AS. Clearly label all important points on your graph.

Inflation is increasingly becoming a concern among economists. One of the heads of Bank of America has predicted that consumer prices will increase by 8% by the end of 2021. Using the AD/SRAS/LRAS graph show how inflation will effect the AD curve. (Start the graph at the macroequilibrium point and show the changes)

What is the recessionary gap and inflationary gap? Explain the following concepts in detail. Use formulas or diagrams that could complete your description.

Define what economists mean when they use the word: “recession”?

Please draw a graph including everything below: Draw a fully labeled AS-AD model (include the AD, SRAS, and LRAS curves) to illustrate a recessionary gap. Label the Price Level (PL1) and GDP (Y1). Then draw a new AD or SRAS curve to illustrate the intended impact the stimulus bills. Label the new Price Level (PL1) and GDP (Y2).

Explain two ways in which a recession might raise the natural rate of unemployment (Macroeconomics field of question)

Should the government use monetary and fiscal policy in an effort to stabilize the economy? The following questions address the issue of how monetary and fiscal policies affect the economy, as well as the pros and cons of using these tools to combat economic fluctuations. The following graph plots hypothetical aggregate demand (AD), short-run aggregate supply (AS), and long-run aggregate supply (LRAS) curves for the U.S. economy in May 2026. Suppose the government chooses to intervene in order to return the economy to the natural level of output by using policy. Depending on which curve is affected by the government policy, shift either the AS curve or the AD curve to reflect the change that would successfully restore the natural level of output. PRICE LEVEL 150 50 30 130 110 8 70 80 50 20 20 22 24 LRAS 28 AS OUTPUT (Trillions of dollars) AD 28 30 AD ਵੇ ㅁ AS ? Suppose that in May 2026 the government successfully carries out the type of policy necessary to restore the natural level of…

Extra Credit The economy of the country Keinesia is heavily dependent on imported oil. Due to a crisis in the Middle East, the oil price has sharply increased. 1. What do you expect to happen to the equilibrium output and prices? Use the AD-AS model to illustrate it. 2. You are the economic adviser to the president of Keinesia. a. Would you advise him/her to implement Fiscal Policy? b. What type of Fiscal Policy would you recommend? c. Illustrate the effect of the Fiscal Policy on the equilibrium output and prices? Use the AD- AS model in part (a) to illustrate it.

How do Classical and Keynesian economists differ in their view of the aggregate supply curve?

State what economic policies (fiscal AND monetary) should be enacted to stabilize the economy. Clearly state your reasons for choosing these policies. What the results of these economic policies look like in the short-run and long-run. In this section, include an AD-AS Model graph that shows the results of your recommended economic policies.